Principles of Marketing

Session 11

Dr Farrah Arif

Steps in designing a Customer-driven Marketing Strategy

1. Segmentation – How to divide up markets into

meaningful customer groups

2. Targeting – which customer groups to serve

3. Differentiation – create market offerings that best

serve targeted customers

4. Positioning – positioning the offerings in the minds

of consumers

Target Marketing

Vs

Mass Marketing

Through market segmentation,

companies divide large, heterogeneous markets into smaller segments that can be reached

more efficiently and effectively with products and services that match their unique needs.

Major Segmentation Variable Table 7.1; Page 163

Segmentation Bases PRIZM NE

Segmenting Business Markets

Some Additional Variables:

Operational Characteristics

Purchasing Approaches

Situational Factors

Personal Characteristics

Segmenting International Markets

Geographical Factors

Economic Factors

Political and Legal Factors

Cultural Factors

Intermarket Segmentation

Effective Segmentation

1. Measurable: The size, purchasing power, and profiles of the segments can be measured.

2. Accessible: The market segments can be effectively reached and served.

3. Substantial: The market segments are large or profitable enough to serve.

4. Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs.

5. Actionable: Effective programs can be designed for attracting and serving the segments.

Market Targeting - Evaluation

Segment Size

Segment Structural Attractiveness

Company Objectives and Resources

Issues Structural Factors:

• A segment is less attractive if it already contains many strong and

aggressive competitors.

• The existence of many actual or potential substitute products may limit

prices and the profits.

• The relative power of buyers also affects segment attractiveness.

A segment may be less attractive if it contains powerful suppliers who can control

prices.

Selecting Target Market Segments

Undifferentiated Marketing

Differentiated Marketing

Concentrated Marketing - Niche

Micromarketing – Local Marketing – Individual

Marketing (one-to-one marketing; mass customization;

markets-of-one marketing)

Choosing a Targeting Strategy

Company Resources

Product Variability

Product’s Life-cycle stage

Competitor’s Marketing Strategies

Market Variability

Differentiation and Positioning

Value Proposition

Perceptual Positioning Map

Choosing a Differentiation and Position Strategy

Differentiating Competitive Advantages

Choosing the right CA

Selecting Overall Positioing

How and Which USP

•Important: The difference delivers a highly valued benefit to target buyers. •Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way. •Superior: The difference is superior to other ways that customers might obtain the same benefit. •Communicable: The difference is communicable and visible to buyers. •Preemptive: Competitors cannot easily copy the difference. •Affordable: Buyers can afford to pay for the difference. •Profitable: The company can introduce the difference profitably.

Selecting Overall Positioning

More for More positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs. More for the Same positioning involves introducing a brand offering comparable quality but at a lower price. The Same for Less positioning can be a powerful value proposition—everyone likes a good deal. Less for Much Less positioning is offering products that offer less and therefore cost less. More for Less positioning is the winning value proposition. In the long run, companies will find it very difficult to sustain such best-of-both positioning.